Credit reports can be deceiving.
Picture this. Each month you pay your bills on time: your rent, your electricity, your water, and gas. Yet, when it comes time to check your credit report, these transactions don’t show. Frustrating, right?
Here’s a fact. Forty-three million people pay for rent across the U.S. every month; for many, rent is 32% of their pay. For many, their credit reports don’t reflect their payments.
So, what gives? As it turns out, most utility and rent payments aren’t reported to the bureau, meaning you’re not getting benefits for regular bills.
On-time purchases should improve your credit score. Period. Luckily we’ve gathered the best ways to ensure your utilities make their way onto your credit report.
What is a Credit Report and Credit Score?
We’re glad you asked. Credit scores and reports are some of the trickiest and most stressful parts of having a credit card. Before you start using your credit card to buy all you can, it’s essential to know all about them.
A credit report is a statement provided by a credit bureau with a summary of your spending information. On the other hand, a credit score is a number value that shows your payment history. This score will affect you for life.
A good credit score helps you lock down apartments, vehicles, and homes, while a bad credit score will do the opposite. Every missed payment negatively impacts your credit scores. Use your credit score as an incentive to keep your payment history clean.
Hate to break it to you, but there’s more. There are a few types of credit scores, with different factors determining your final value. The two most common are FICO and VantageScore, but dozens of options are available.
OK– back to it.
Do Utility Bills Affect Credit Scores?
Don’t count on your landlords. Reporting typically comes with a small fee, meaning your credit card issuer, loan issuer, and landlord have no incentive to report your payments.
Unfortunately, a bill must be on your credit report to impact your credit score.
In most cases, you’ll have to do it yourself. Luckily, you’re a headstart independent, ready to take on your finances.
Do Late Utility Bills Affect Credit?
Before we begin– we’ve got bad news. While paying your utilities most likely won’t help, they will hurt your credit score. That’s because creditors must report delinquent payments.
So, if you slip up on paying the utility company, it can and will affect your credit history. Finances seem unfair and impossible, we know.
Let’s turn the tide in your favor.
Get Utility Bills on Your Credit Report
Credit reports calculate your on-time payments, so they should include your utilities.
Don’t give up. We’ve brought some options to the table.
What Bills Can I Add to My Credit Report?
With the right moves, you can add most bills to your credit report.
- Rent: Apartments, homes, townhouses
- Communications: Internet and cell phones
- Utilities: Sewage, waste, water, gas
- Entertainment and Subscription Services: Anything from Netflix and HBOMax, to BlueApron and HelloFresh
The trick? Learning how to report these as credit-worthy payments.
Talk to your Creditor
Pretty self-explanatory? Instead of taking a back route, get right to the source. A simple talk to your landlord or creditor might clear up the whole situation.
Are you a non-confrontational Pisces worried you might freeze up in the conversation? Relax. Asking to report your bills is a common request.
Email, text, whatever, just ask your landlord: “Hey, can you report my bills to the credit bureau?” If they’re cool, they’ll come back with: “You got it, boss.” If they’re business-savvy: “Sure, but you’ll have to pay the fees.”
Reporting fees vary, so don’t jump right in. Take time to consider your income and if they’ll fit your budget.
Experian Boost And Other Services
Credit companies want to help.
Experian (the company which uses the FICO score) offers a new service called Experian Boost, described as a feature designed to “improve your credit score by factoring in your on-time utility and cell phone payments.”
Experian Boost is free so long as you have an active credit account. Cha-ching. But what’s the catch? Well, the benefits from Boost will only be visible on your Experian credit report, meaning if a creditor goes TransUnion or Equifax, you’re in the doghouse.
Other third-party services offer similar benefits, such as RentReporters and SimpleBills. Keep in mind: keeping track of these accounts may be difficult and come with high start-up fees. Finances get confusing; try to keep them as simple as possible.
Keep Your Credit Score High
Don’t mess around with your credit score.
When it comes to your finances, advocate for yourself. Make sure you’re getting the most out of your monthly payments by improving your score as much as possible.
If you can’t get your utilities on your credit report, you’ll have plenty of opportunities to raise your score elsewhere. At EXTRA, we’ve compiled plenty of methods to keep your credit score high.
Learn how to build your credit score at 18 to set yourself up for a successful future. Already behind in late payments? There’s no better time to start cleaning up your credit history.
No matter where you are in your crediting journey, it’s never too late. Keep building your credit day by day. With enough time, all this pesky work and time will pay off. We promise.